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A New Boom to Come? Re-Evaluating the Success of the New TLD Program

I think it's fair to say that quite a few people — both within the domain name industry and beyond — have an opinion on whether the new TLD program is succeeding or struggling.

But are things really all that bad? Are we forecasting doom before it has really had a chance to run?


Crunching the numbers

Let's consider the (relatively short) history to this point and take a look at some statistics. In 2012, 1,930 applications were received by ICANN for new TLDs — however accounting for multiple contending string applications, withdrawals and so on, the eventual number of new TLDs to enter the digital ecosystem is likely to be closer to 1,300.

Opponents of the new TLD program are quick to point out the "slow" registration numbers seen across the program; however I'm not so sure this is true when we take a more 'birds-eye' view of the wider industry in two important areas — comparative registration volumes and target market awareness.

Registration Volumes

It's been just 18 months since the introduction of the very first new TLDs to the root zone, over which time we have seen more than 700 TLDs delegated.

In that short time, businesses and individuals in all shapes and sizes across the world have registered over 6.5 million domains.

To put it another way, new TLDs have total registrations equalling nearly 5.5 percent of the incumbent powerhouse TLD, .com in just 18 months.

This alone is an impressive effort, but it may be even more positive if we dig just a little deeper:

  • The average new TLD has been delegated for just 11 months.
  • 50% of new TLDs have been delegated for 6 months or less.
  • 25% of new TLDs have been delegated for 3 months or less.

To summarise, of the 1,300 or so expected new TLDs, only 25% have reached a point where they can realistically sell domain names to their intended target markets (taking into account mandatory name collisions). Yet just this fraction of the expected total of new TLDs have reached 5.5% of the registrations that .com has been able to achieve in more than 30 years.

Furthermore, these figures have occurred without some of the TLDs that are likely to be the most popular (for example .music and .shop), which are still to launch due to the sheer number of people vying for ownership.

Awareness

In addition to the industry-wide registration growth numbers, awareness in the target market continues to grow in a similarly impressive manner.

ARI Registry Services conducted a study in 2011 which highlighted that only 15% of respondents were aware of the increasing options for domain names. When that is compared to the recently conducted ICANN/Neilsen survey which showed 46% of people were aware of the same metric, it's clear that awareness is growing significantly.

As momentum grows and more TLDs are delegated the awareness level should increase exponentially. This will also be helped in large part by .brand TLDs, many of whom are up and running, with the remainder expected to sign Registry Agreements by the ICANN imposed 29 July deadline.

Vital to end user awareness of new TLDs, we are seeing major global brands transition to usage scenarios with their .brand TLDs (Barclays Bank to www.home.barclays, BNP Paribas to www.mabanque.bnpparibas) and each high-profile launch helps people to become aware of the significant opportunity these TLDs present.

Practicality vs positivity: a balancing act

The highly-competitive, ever-changing environment of the technology sector and the domain name industry in particular mean that new products and developments such as new TLDs are under constant scrutiny.

This isn't about putting our fingers in our ears and yelling to avoid hearing the criticism. No one is denying that new TLD operators face some challenges and that this is a marathon, not a sprint.

However it's also important to recognise the achievements and successes that have been reached by the wider industry so far and the positive signs for continued growth that are already emerging.

The new TLD world is dynamic, diverse and full of innovators. Let's not forget to acknowledge that — and maintain a justifiably optimistic outlook on the changes to come.

By Ryan Baker, Advisor, Professional Services at Neustar Inc.

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Comments

No Marketing By Dietmar Stefitz  –  Jul 28, 2015 1:03 am PDT

Very good analysis. Thanks. You forgot to mention, that very little Marketing effort has been made until now.

Big surprise By John Levine  –  Jul 28, 2015 5:59 am PDT

None of the new TLDs in the 2000s got anywhere near their estimated registrations. Most barely made their so-called worst case. Why exactly should these be any different? They're no more useful.

Thank you for the article Ryan.The New By Constantine Roussos  –  Jul 28, 2015 1:11 pm PDT

Thank you for the article Ryan.

The New gTLD Program has three problems:

1) The top brands which enjoy the most Internet traffic and popularity (such as Google, Apple, Microsoft etc) have not replaced their .COM domains with their .BRAND TLD. As Kevin Murphy has indicated on DomainIncite, many brands are playing the waiting game to see how other .BRAND TLDs will use their new extensions. Many have not yet developed a launch strategy on how to use their .BRAND TLD.

2) The majority of "generic" strings are run by a few select portfolio companies operating under an "open" model without much differentiation operating under similar launch and marketing execution plans. This leads to all these strings becoming commoditized or becoming wastelands since they cannot differentiate beyond their vanity name when compared to .COM. A significant portion of many portfolio applicant's cash flow has been their cash cow business model of private auctions. Question now is what will happen when that significant revenue source runs out.

3) Some portfolio applicants (e.g. Donuts, Famous Four, Minds & Machines and Radix) have held ICANN and many popular strings hostage by taking advantage of unforeseen loopholes by attacking ICANN and the EIU to purposely delay the launch of prevailing community applicants through ICANN acountability mechanisms (Reconsideration Requests, CEP and IRPs - See https://www.icann.org/resources/pages/accountability/irp-en). These include .SPORT, .HOTEL, .ECO, .RADIO and others. The .SPA string (which recently prevailed CPE) will also suffer the same fate since it is almost guaranteed that Donuts will continue its pattern of obstructive and anti-competitive behavior to once again file a Reconsideration Request, followed by a CEP, then an IRP against ICANN and the EIU in hopes of extracting a "settlement" from the prevailing .SPA applicant or plainly to ensure small, single-applicant competitors do not enter the marketplace.

One community applicant, fTLD, has shown that a community-based string with community-tailored policies makes a lot of sense (especially for strings in a regulated market, such as .MUSIC etc). In my opinion, the only TLDs that will receive industry/community adoption are those that are customized for those communities with the right policies and governance structures that instill trust. .BANK's community-based launch has been a great example of this (See post by Michael Berkens at TheDomains and .BANK article on ThinkAdvisor).

One can argue that the widely-perceived failure of the New gTLD Program when it comes to generic strings to compete with .COM thus far is one based on the lack of diversity (since the vast majority are controlled by a few portfolio companies), lack of differentiation and lack of innovation that would make a meaningful positive impact to the registrant (beyond the vanity name that represents the TLD).

I agree with you that it is very soon to make a prediction for some TLDs since adoption and awareness for some may take more time than expected.

Constantine Roussos
.MUSIC

Yeah, let's look at some statistics By Ken Ryan  –  Jul 29, 2015 2:01 am PDT

To date .INFO has lost 3,136,458 registrations from its March 2012 high point of 8,325,242 and continues to lose registrations month over month.  .INFO was introduced in 2001 - that's enough time to generate awareness!

How do the ngTLDs differ?  They lack first mover advantage while battling for mind share in an increasingly cluttered marketplace. Is it really justifiable to maintain an 'optimistic outlook on the changes to come'?

Not trying to be a mood killer By Christopher Hofman Laursen  –  Jul 30, 2015 5:56 am PDT

Not trying to be a mood killer here, but I think it would be fair to mention how many of the 6.5M domains were given away or sold at a very low price. http://www.thedomains.com/2015/06/08/new-gtlds-top-6-million-domain-registrations-we-break-down-the-numbers/

Not so optimistic By John Laprise  –  Jul 30, 2015 7:35 am PDT

It seems to me to be a classic long tail issue combined with the first mover advantage for the original gTLDs. The wave of consolidation we're seeing reflects this. Most but not all ngTLDs will end up being held by related parties or by aggregators.

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